TOAP UITF Certification Program Qualifying Exam flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

UITF definition

A collective investment scheme set up under a trust, where investors buy units representing proportionate ownership of a pooled portfolio managed by an investment manager and held by a trustee.

BSP regulatory basis

UITFs are governed by the Bangko Sentral ng Pilipinas through the Manual of Regulations for Banks, which sets approval, investment limit, valuation, and disclosure requirements for trust products.

Trustee versus investment manager

The trustee safekeeps fund assets, computes NAVPU, and ensures compliance; the investment manager makes buy and sell decisions under the fund's declared policy.

No PDIC coverage

UITFs are not deposits and are not insured by the Philippine Deposit Insurance Corporation; losses from market movements are borne by unitholders.

Trust fee mechanics

A percentage of net asset value accrued daily and deducted from the fund before NAVPU is computed, distinct from any sales load charged to the investor.

Money market UITF

A fund holding deposits and short-term instruments with remaining maturities of one year or less, targeting low volatility and high liquidity for short horizons.

Equity UITF minimum

An equity fund must keep at least 80% of net asset value invested in equities; the remainder may be held in cash or fixed income for liquidity.

Feeder fund rule

A feeder UITF invests at least 90% of assets in one target fund, usually offshore, and must disclose the target, its domicile, and layered fees.

Balanced fund structure

A UITF holding both fixed income and equities within a declared allocation range, offering diversification between growth and income assets at moderate risk.

Currency risk in UITF

Risk that foreign-currency holdings lose peso value when the exchange rate moves; hedged share classes reduce this but incur hedging costs.

Leverage prohibition

UITFs may not borrow to increase exposure; the fund invests only within the assets and limits approved in its plan by the BSP.

NAVPU formula

NAVPU equals total assets minus total liabilities, divided by total units outstanding, computed to the decimal places specified in the fund plan.

Fair value valuation

Assets are valued at current market value, not cost; equities use closing prices and fixed income uses marked-to-market or allowed amortized cost.

Forward pricing

Subscriptions and redemptions are priced at the NAVPU struck at the next valuation point after a complete instruction is received, per the fund plan.

Unit creation on subscription

Units issued equal the subscription amount divided by the applicable NAVPU; redemptions cancel units at the NAVPU on the redemption valuation date.

Accrual in NAV

Accrued interest income, receivables, and accrued liabilities such as trust fees and taxes are included in NAV so the NAVPU reflects earned but unpaid amounts.

Valuation error correction

A material NAVPU error triggers a threshold-based correction, with affected investors compensated and the regulator notified per the fund plan and BSP rules.

Suitability assessment

A documented evaluation matching the fund's risk class to the client's risk tolerance, investment horizon, liquidity needs, and objectives before any subscription.

Performance presentation rule

Returns must be shown net of fees over comparable periods; back-tested or hypothetical results must be clearly labeled and never presented as actual performance.

Prohibited sales language

Agents may not describe a UITF as safe, guaranteed, or deposit-like, nor promise principal protection or a specific return, because values fluctuate.

Agent registration

Only certified and registered agents of the trustee or investment manager may solicit or accept UITF subscriptions; unregistered solicitation is prohibited.

KIIDS purpose

The Key Information and Investment Disclosure Statement gives pre-investment information on objective, strategy, risks, fees, and past performance, and must be current.

Onboarding documentation

Account opening requires an application form, risk assessment, identification documents, and signed acknowledgement of the KIIDS and trust agreement.

Subscription confirmation contents

A confirmation shows units issued, the NAVPU applied, the valuation date, the amount invested, and any fees charged to the client.

Record retention period

Client identification and transaction records are generally retained for at least five years after the account is closed, consistent with BSP and AML requirements.

Customer due diligence

Covered institutions must identify clients, verify identity, and identify beneficial owners, applying enhanced due diligence to politically exposed persons and high-risk clients.

Suspicious transaction report

A report filed with the Anti-Money Laundering Council when a transaction appears unusual or lacks economic sense; the client must not be tipped off.

Liquidity risk controls

Redemption terms should match asset liquidity, a cash buffer is maintained, and any suspension or gate powers are disclosed in the fund plan.

Related-party investment limit

Investments in the trustee's or manager's own products or related parties are capped and must be disclosed and approved under the fund's conflict policy.

Fiduciary duty

The trustee and manager must act solely in unitholders' best interest, placing fund interests ahead of firm revenue, cross-selling, and proprietary positions.

Front-running prohibition

Staff may not trade ahead of or alongside client fund orders using non-public information, and orders must be executed in the sequence received.

Personal trading controls

Fund staff must pre-clear personal trades in instruments held by the fund and observe blackout periods to prevent misuse of inside information.